Inchcape motors pension scheme

The key things to note about pensions and related benefits are:

– Triple lock: this remains in place so the State Pension will keep going up each year by the highest of 2.5%, inflation or earnings growth. State Pension increases will be 4.1% from 6 April 2025.

Inheritance tax: there’s a new proposal that, from April 2027, unused pension pots would form part of your estate and be subject to inheritance tax. Your beneficiaries would only pay inheritance tax if your estate is above £325,000 (possibly up to £500,000 if you’re leaving your home to a direct descendant). The Government is currently consulting on this proposal.

Pension scheme administrators: administrators of registered pension schemes will need to be UK residents from 2026.

Overseas transfers: pension transfers to a qualifying recognised overseas pension scheme established in the European Economic Area or Gibraltar will now face a 25% overseas tax charge. They had previously been excluded from this charge.

If you’re aged 45 to 65, you should visit the GOV.UK digital ‘Midlife MOT’ service. It provides free online support that allows you to assess your finances and wellbeing to prepare for a more secure retirement. You can find this at: www.yourpension.gov.uk/mid-life-mot/.

The Finance Act 2024 abolished the lifetime allowance (LTA). The LTA was the amount of savings you could have at retirement from all your pension scheme benefits combined, without incurring an additional tax charge. 

The Government has replaced the LTA with two new tax-free lump sum allowances:

• the lump sum allowance (LSA) and lump sum – the LSA is £268,275 for the 2024/25 tax year and is the amount of tax-free cash you can take from your pension benefits.
• death benefit allowance (LSDBA) – the LSBDA is £1,073,100 for the 2024/25 tax year and is the amount of death benefits that can be paid tax free.

These new allowances apply to all your pension benefits.

Should you exceed the new allowances, an excess will be charged at your marginal tax rate. If you are impacted by these changes, we recommend you seek professional advice.

The annual allowance (AA) is the maximum amount of pension benefits you can save each year with the benefit of tax relief. For the 2024/25 tax year, it is £60,000, but if you have a high income or have started to draw money purchase benefits in a flexible way, your AA may be as low as £10,000 a year.  

You may have seen Inchcape PLC recently announced the decision to sell its UK retail operations to Group 1 Automotive UK Limited following a review of options for its UK retail business.

As many IMPS members were employed by an Inchcape UK retail business, you may wonder if this news will have any effect on the Scheme or the security of your IMPS benefits. We’ve had regular discussions with Inchcape over recent weeks and months about the UK strategic review – they’ve kept us informed of progress and there have been no surprises.

We’d like to assure you we, as Trustee of the Scheme, are here to act in your interests and manage the Scheme to ensure you receive the benefits due to you. Key points to note (some have been highlighted in previous communications) are:

• IMPS is well funded – as Trustees we’re comfortable there’s enough money in the Scheme to pay members’ benefits, based on advice we receive regularly from the Scheme’s Actuary.
• Your benefits are secure – the Scheme is held separately from Inchcape and will not be affected by the proposed sale of Inchcape’s UK retail operations. Member benefits are paid from the Scheme’s own fund of money, built up from contributions paid into the Scheme and invested by the Trustee.
• The Inchcape Group remains in support – Inchcape is committed to fund the Scheme so members receive the benefits they’ve been promised.
• The Scheme’s journey remains unchanged – we have an agreed long-term strategy for the Scheme and are continuing to take steps to further enhance the security of your benefits (including looking at investment options) and help you understand them better.

If you have any questions about your benefits or the Scheme in general, please get in touch with Equiniti, the Scheme administrator.